Corporate Transparency Act: What Employers Need to Know About Beneficial Ownership Reporting

What Changed

The Corporate Transparency Act (CTA), enacted as part of the Anti-Money Laundering Act of 2020, introduces a new federal requirement for many businesses to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Beginning January 1, 2024, reporting companies must disclose information about their beneficial owners — individuals who exercise substantial control over the company or own at least 25% of its ownership interests.

Required information includes the beneficial owner's full legal name, date of birth, residential address, and an identifying number from an acceptable identification document (such as a driver's license or passport).

Important note: Subsequent legal challenges and rulemaking have affected the CTA's enforcement timeline. As of early 2025, FinCEN issued an interim final rule narrowing the reporting requirement to foreign entities only. Domestic companies should monitor FinCEN for the latest guidance on whether and when they must file.

Who Is Affected

The CTA's reporting requirements apply to reporting companies, which broadly includes corporations, LLCs, and similar entities created by filing a document with a secretary of state or similar office. The law includes 23 categories of exempt entities, generally larger or already-regulated entities, including:

• Companies with more than 20 full-time employees, more than $5 million in gross receipts/sales, and an operating presence in the U.S.

• Publicly traded companies

• Banks, credit unions, and other financial institutions

• Tax-exempt organizations

Small businesses and closely held companies are most likely to be subject to the requirement.

Where It Applies

This is a federal requirement applying to qualifying entities formed or registered in any U.S. state or tribal jurisdiction.

When It Takes Effect

The reporting requirement originally took effect January 1, 2024. Companies formed before that date originally had until January 1, 2025 to file their initial reports, while newly formed companies had 90 days. However, enforcement timelines have been subject to legal challenges and regulatory changes — employers should check FinCEN's website for current deadlines.

Why It Matters

While this is primarily a corporate governance and anti-money laundering requirement rather than a traditional HR compliance issue, it affects many small and mid-sized employers who may not be aware of the obligation. Penalties for willful non-compliance can be severe: civil penalties of up to $500 per day the violation continues, and criminal penalties of up to $10,000 and/or two years imprisonment for willful violations.

The Humareso Take

This one is a bit outside our usual HR compliance wheelhouse, but it landed in enough employer inboxes that it warrants attention. If you run a small LLC or corporation, you should determine whether you qualify as a reporting company under the CTA. The exemptions are broad enough that many mid-sized employers are off the hook, but smaller operations may need to file. We recommend looping in your legal or accounting team on this one — it is more of a corporate filing than an HR task, but the penalties for ignoring it are not trivial.

Recommended Action Steps

1. Determine whether your business qualifies as a reporting company under the CTA by reviewing the 23 exemption categories on FinCEN's website.

2. Identify your beneficial owners — individuals who exercise substantial control over the company or own at least 25% of ownership interests.

3. Gather required identification documents for each beneficial owner.

4. Consult with your legal counsel or accounting firm to confirm your filing obligations and current deadlines, given ongoing regulatory changes.

5. Monitor FinCEN's website (fincen.gov/boi) for the latest updates on enforcement timelines and exemptions.

6. Contact your Humareso representative if you need help determining how this intersects with your HR and organizational compliance obligations.